30 Oct

The quiet start-up

The Quiet Start-up and Investors

Entrepreneurship is getting hot and trendy in Norway these days. Media is fighting to have the best coverage and there are numerous events to attend. I’m right in the bubble myself right now. We just started to look for an €500K investment and I feel the urgent need to be present at all the right events and visible in the media to make it happen. 

Then I read a story from Simon McDermott, a brilliant Irish friend of mine living in the start-up world in Belgium. It made me think. Seriously. Made me think!

I doesn’t make sense to sum up the story. You should read it yourself.  So here it is: 

 

THE QUIET START-UP

The quiet start-up was founded in a city that wasn’t ranked by anyone as a great place to begin a business. The initial team did not come from MIT or Harvard. The founders met at a workshop that was discussing a problem that many customers face. In the drinks after, one of them said something very intelligent about how the problem could be solved, and the other said to himself, «I better reach out to her soon, that’s a great idea».

He did. And after a few conversations, and perhaps one or two bottles of wine, a one-pager was put together. The one-pager said this is how we could build something, target a market and make some sales. Later they built a prototype. It cost them almost nothing and they showed it to some friends and a handful of potential customers.

The first clients emerge

One of those people offered them money to build a pilot. They accepted and with this deal they decided to rent a small space, pay themselves nothing for a few months but put their energy into the business. The pilot was messy but it worked, they spoke frequently with the client. The pilot became a full deal and then after some months they had a 2nd, 3rd and 4th client. Things were tight, but they survived. They even paid themselves a little.

Later they hired a couple of people to cover areas where they just didn’t have the deep knowledge. Some shares were promised. They explained the risk. It didn’t matter, the people came to them anyway. They liked the mission of the business. When it came to future hiring they never bothered with «A», «B» or «C» employees, they hired good people who knew their stuff and people the company could afford.

They occasionally went to events, if the event was extremely core to their purpose and was cheap enough. They found that some deals came to them this way, but often after a year or later. This wasn’t too strange because they knew their sales cycle and cost of acquisition. They never understood why competitors went to every event, like a student who thinks he’s popular because they go to every party and gets a D on their report card?

An offer is made

They never looked for finance. As a result growth was slow at the beginning, but one day the CEO got an email from an investor, who’d been recommended to them by multiple clients and employees. She said she’d like to invest. The quiet start-up said they would listen to what they had to say. An offer was made and it was fair, some things we’re not so smooth but everyone trusted each other and a deal was done. The business, now 4 years old, had financing, new dedicated people and an actual plan to build their business by providing better products to their customers in new markets.

Two years later, some employees had left and others joined, and most clients stayed and some didn’t, one of their employees went to one of the infrequent events they attended, and presented their story. A massive technology company was there and said «we’d love to meet your team to discuss what you’re doing». Months later they offered to buy the company. The offer was substantial and would benefit employees, customers and shareholders. It was signed and the deal closed with little fuss.

Tech publications were aghast. How did this massive deal happen under their noses? They created more value than all of the companies they covered in their pages, and generated one one-hundredth of the gossip. When they reached out for a story the founders were unavailable for comment. They were working on the product and dealing with their customers.

 

Foto: Startup Mena

Om forfatteren:
Geir Sand Nilsen er gründer av 100x og bygger nå opp EdTech Foundry. 100x sitt mål er å starte, bygge og skalere 100 tech startups på 100 år. Siden oppstarten av Fanklubben Heia Bortelaget (av Lerkendal) i 2000, har Geir viet hele sin yrkeskarriere til å starte opp og drive startups. Han er tidligere kjent som mobilguru, men erklærte karrieremessig selvmord i 2014 for å rette fullt fokus på sine 100 startups. Geirs private mål er å komme hjem til familien og fortelle at han akkurat har kjøpt et NBA-lag.

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